Editor’s Note: This is Part Two of a two part series on this specific solar power project in the U.S. Part One deals with the potential for great success. Part Two provides an alternate view of why the accomplishment may be financially risky and not subject to duplication almost everywhere else in the U.S. and other perspectives.
In Part One, we noted a very substantial potential for financial disaster. Specifically, the $1.6 billion loan guarantee from the U.S. Dept. of Energy raises difficult and sensitive issues. Why should private investors with the substantial means of Google be protected by taxpayers in the form of federal loan guarantees? Runaway policy dictated more by politics than economics and reality has led to enormous failures in the solar industry on the scale of billions. Solyndra is the most notorious but just one of the many economic disasters resulting from the ill-conceived and poorly managed Economic Stimulus Bill of 2009, otherwise known as the American Recovery and Reinvestment Act.
Politics and economics aside, we move to geography. We mentioned that certain unique factors make the Ivanpah project difficult and certainly impossible to duplicate in vast regions of the United States. Nowhere in the eastern one-third or northern half of the U.S. can a suitably similar plot of real estate be found. The vastness of the real estate, desolation, and terrain conditions required for such a solar plant is simply not available in the overwhelming
majority of the 50 states. Highly populated areas of the country such as the northeast megalopolis or southern California, the Appalachian states, or the intermountain west cannot host such a facility. Even in the flat expanses of Iowa, solar has lost out to wind as a proposed 1,050 Mw wind generation plant worth $1.9 billion has been approved for MidAmerican Energy of Des Moines.
The primary reason that the Ivanpah project works is its dessert wasteland location, otherwise unsuited to development for other purposes without prohibitively high costs. It is also federally owned land. Acquisition and repurposing costs would be a substantial barriers in most other locations. Because of the remote locations and very unusual use as a solar farm, Low Impact Development techniques are relatively easy to deploy. Such would not be the case in most other locales and thereby drastically drive up project costs. This photo shows less than hospitable human accommodations.
In the August 13, 3013 companion article in ENR cites the figure of 900-MW total of solar power generating capacity will be commissioned during 2013, according to the industry advocate group, Solar Energies Industries Association. This rush toward putting solar into place is fueled by a crucial federal tax credit. Tax credits, which reduce tax liability on a dollar-for-dollar basis (as opposed to deductions that reduce taxable income) set to expire in 2016. This Renewable Energy Investment Tax Credit provides up to 30% credit on new solar and wind power projects. There is no maximum credit amount.
Congress should authorize extension the tax credit to encourage more renewable energy infrastructure. What it should not do is provide loan guarantees. Back off on foolish and ill-advised regulations that choke the interests of coal and drilling technologies in particular.
Allow the marketplace to compete. The result will be an energy independent country within the next five years, a dream that has eluded the U.S. for at least 40 years.